... American universities, eager to expand to markets abroad, are training their sights on India. Some 40 percent of the population is under 18, and a scarcity of higher education opportunities is frequently cited as a potential hurdle to economic progress.

The American universities are just testing the waters, because the law here is still vague on how foreign educational institutions can operate. But that may soon change.

[The Bush administration’s envoy for public diplomacy, Karen P. Hughes, is visiting India this week with a half-dozen American university presidents to promote Brand America in Indian education. The United States wants an easing of rules under a draft law on foreign investment in Indian education, which is to be introduced in Parliament in April.]

If the law is approved, foreign institutions would be exempt from strict rules that currently apply to all government-accredited universities in India on fees, staff salaries and curriculums. The government has already proposed setting up an expert committee to review the standards and reputation of foreign universities that want to establish independent campuses here.

The growing American interest in Indian education reflects a confluence of trends. It comes as American universities are trying to expand their global reach in general, and discovering India’s economic rise in particular. It also reflects the need for India to close its gaping demand for higher education.

Among Indians ages 18 to 24, only 7 percent enter a university, according to the National Knowledge Commission, which advises the prime minister’s office on higher education. To roughly double that percentage — effectively bringing it up to par with the rest of Asia — the commission recommends the creation of 1,500 colleges and universities over the next several years. India’s public universities are often woefully underfinanced and strike-prone.

Indians are already voting with their feet: the commission estimates that 160,000 Indians are studying abroad, spending an estimated $4 billion a year. Indians and Chinese make up the largest number of foreign students in the United States.